Lending a hand

Today, women wear a new face. Gone are the days when they were considered to be the home dolls and confined to four walls of homes, doing cooking and other household chores. All out-door jobs were the fiefdom of male members of the family. In their new jo

“No trumpets sound when the important decisions of our life are made. Destiny is known to act silently”. Agnes DeMille’s quote fits perfect with the story of Pooja Nanda, a successful woman entrepreneur from Varanasi. In 1995, Nanda lost her father. Left to fend herself, she was compelled to find a job. She was appointed as a Custom Relation Officer at Eureka Forbes. She worked with the company for five years. While at Forbes, she learnt of franchising. The company offered franchise to its opting employees. Nanda took up the cudgels, and forayed into the franchisee business of Eureka Forbes. In the meantime, she got married too and gave birth to a child. As the business was product oriented, she had to devote a lot of time to her business. It proved to be too hectic and weary. She also needed time to groom her child. So, she left franchise of Foreka Forbes. But then, as the child grew, and she could spare time, she again stepped into franchise business. And this time she opted for franchise of Shahnaz Hussain. She is excellently doing well in the business. “Becoming a franchisee of Shahnaz gives me the benefit of brand name, good credit and respect in the concerned sector”, says Nanda. She recounts, she needed a loan amount of Rs.10-12 lakh when she took the franchise of Shahnaz. But she preferred to borrow the amount from her friends and relatives instead of going to banks. When questioned as to why she did not prefer a public sector bank for loan, her reply was, the later sought the security of assets in lieu of the loan amount, which she did not have to produce, and then, it would cause her lot of pressure and strain to provide any such. Besides, the condition of repayment of monthly instalments within the prescribed time frame would further strain her. So, to avoid such nightmares she preferred loans from relatives. Nanda’s words may resonate with many other entrepreneurs or franchisees’. Although India ranks 17th in the world on women entrepreneurship, but due to lack of proper knowledge and information, there are still women in the country who are lagging on this front.

A woman, who doesn’t have any source of income or any financial back-up, can also fulfill her desire to start her own business. Many public sector banks have devised easy loan schemes for women entrepreneurs. Under these schemes, finance is either available at concessionary rate of interest or at reduced margins.

Concessionary rates of interest for women entrepreneurs:

The concession on ROI (Rate of interest) generally differs from 0.5 per cent to 5 per cent over the applicable rate depending on the loan amount. Applying for this scheme is similar to other types of loan, but with the difference in terms and conditions. The most common condition which every bank keeps is that the business should be owned fully or at least 51 per cent of the business should be owned by the women – either single woman or a group of women.

The State Bank of India, the largest bank under the Reserve Bank of India, offers Stree Shakti Package (SSP). The SSP plan extends concessions up to 0.5 per cent, if the loan amount falls between Rs 2 lakhs to Rs 50 lakhs, whilst if the amount is less than Rs 2 lakh, the bank does not allow any concession. No security is required for loans up to Rs 5 lakh in case of tiny units.

Oriental Bank of Commerce: Under its scheme for beauty parlours/ salons/ boutiques/ tailoring, the loan limit is Rs 10 lakh, while in the case of ‘Oriented Mahila Vikas Yojna’, the loan amount may differ with the need of the borrower. In case of former scheme, security is charged over the assets purchased out of banks finance while in later no collateral security is required up to Rs 10 lakh. In case of small scale industries, no collateral security is required up to Rs 25 lakh. There is a scheme for professionals and self employed women, which helps them in buying fixed assets and for meeting working capital needs. Its maximum limit is Rs 5 lakh including working capital of Rs one lakh.

Bank of India: promotes women entrepreneurs through its Priyadarshini Yojna, in which the extent of finance may differ with the project cost and its turnover. The concession on rate of interest varies from 0.5 per cent to 2.0 per cent. No collateral security is required for advances up to Rs 5 lakh. Its repayment would be spread over three to seven years depending upon the activity.

SIDBI: mainly provides assistance to women as indirect finance in respect of small scale industries. It acts as a primary lending institution for banks and State level institutions. Micro credit finance is also extended to the needy borrowers. Mahila Udyam Nidhi and the scheme for women entrepreneur are the two special schemes meant for women. The purpose of these schemes is to meet the gap between equity by setting up new projects in tiny/small scale sectors and rehabilitation of viable sick SSI units.

Other plans:

In the north east, women enjoy a special status in the society. As compared to men, women in this region enjoy a higher position. They contribute in the development of the society. North Eastern Development Finance Corporation ltd., as a financial institution provides training and financial assistance to women. They have different schemes under a single umbrella – Micro Finance Scheme (MF), North-East Equity Fund Scheme (NEEF), Scheme for North – East Handloom and Handicrafts (SNEHH), Jute Enterprises Development Scheme (JEDS) etc. NEDFi provides two types of loan – soft loan and term loan. The project cost should not exceed Rs 5 lakh and the financial institution is ready to assist up to 25 per cent, in case of soft loan, and in case of term loan, it is ready to support up to 60 per cent. Its repayment could be done in between the time period of 3 – 7 years.

Mahalir loan is one of the business loan schemes, under TMB business loan products. This scheme offers loan up to Rs 10 lakh with interest on diminishing balance. Under this, the guarantee should be obtained from husband, father of the proprietor/partner.

Even the Government has launched a scheme, namely Trade Related Entrepreneurship Assistance and Development (TREAD) during the 11th Plan. It empowers women to develop their entrepreneurial skills in non-farm activities.

Though a number of credit schemes are available for women, but still there are some bottlenecks in the name of complicated procedure, monthly instalments, rate of interest etc., which is required to be rooted out to start a women entrepreneurial revolution in India.

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